Orange City Finds Utility's Repayment Offer Lacking

July 3, 1986|By Ian Johnson of The Sentinel Staff

ORANGE CITY — After learning that the city spent about $31,000 of taxpayers' money in a failed effort to purchase West Volusia Utilities, city council members balked at accepting $15,000 from the utility as partial compensation.

Also at Tuesday night's special meeting, the council decided to pursue the purchase of the Orange City Water Co., which is owned by Tamm Moody. Moody has indicated he is willing to sell the company but hasn't set a price.

The offer to the city came from utility attorney Ed Schrank because the city complained that it should be repaid for the lost money.

After signing a letter of understanding with the city last year, Schrank started negotiating with Volusia County and now has indicated that the county will buy it. This angered city officials, who said Schrank misled the city and caused it to waste the money, which was spent on attorneys and consultants.

Mayor Alex Chumley said $15,000 is owed to City Attorney Jose Alvarez for his time spent negotiating the purchase; this does not include expenses. Approximately $16,000 more was spent on consultants, primarily on the Daytona Beach engineering firm of Russell & Axon, Inc.

Chumley recommended that the council accept the $15,000 offer, which he said was a better deal than taking the risk of a lawsuit.

But council member Steve Ryle said the council had not received a ''complete and total accounting'' of the cost of the negotiations. If the city paid more than $31,000, then the $15,000 offer would be too small, Ryle said. The council decided to table the offer, even though Schrank's letter said that the offer expired Tuesday. Chumley said he will call Schrank to see if he will extend the offer.

The city also will be in touch with Schrank because he is the attorney for the Orange City Water Co., a fact that several council members said could kill their chances of buying the utility. Council member Suzanne Brant said she is ''troubled'' with having to negotiate with Schrank after his treatment of the city during negotiations for West Volusia Utilities.

Alvarez wrote a letter to Schrank, saying he will be available today, Tuesday and July 10 for negotiations. Brant suggested that copies of all letters be sent to Moody so he could be fully informed about the negotiations. Council members have said that they felt Schrank did not tell West Volusia Utilities owner Richard McMahan about his agreement with the city and subsequent switch to the county.